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Economic Times
20 hours ago
- Business
- Economic Times
Will Reliance shares deliver bumper returns for 48 lakh shareholders? 3 game-changing triggers ahead
Despite recent investor disappointment with Q1 results, Reliance Industries (RIL) is poised for significant growth, according to major brokerages. Jio's rising ARPU through tariff hikes, the ambitious new energy business entering execution phase, and the potential Jio IPO are key catalysts. Analysts project substantial value creation, with targets indicating confidence in RIL's transformation. Tired of too many ads? Remove Ads Here are 3 growth triggers that can ignite a rally in RIL shares: 1) Jio's ARPU Explosion Through Strategic Tariff Hikes Tired of too many ads? Remove Ads 2) New Energy Business: The Next Opportunity Tired of too many ads? Remove Ads 3) Jio IPO: The Ultimate Value Crystallization Event While billionaire Mukesh Ambani-led Reliance Industries RIL ) disappointed investors with Q1 results that fell short of street expectations, leading to sharp selling pressure after a blistering 25% rally from March lows, major brokerages see a perfect storm of growth catalysts brewing that could trigger substantial value creation in the months mixed street reaction tells the tale of two stories: Kotak Equities downgraded the blue-chip Nifty heavyweight to 'Add' from 'Buy,' while global giants JP Morgan and Jefferies boldly upgraded their target prices by 8% and 5% respectively, signaling confidence in the oil-to-telecom giant's transformation delivered a "strong beat on higher margins" with ARPU climbing 1.3% quarter-on-quarter to ₹208.8 per month, according to Bernstein. But the real fireworks are yet to come."Over FY25-28, we expect Jio's ARPU to rise at 11% CAGR to Rs273, led by three tariff hikes of 10% each in end-2QFY26/27/28," Jefferies analysts project, with rising share of higher-ARPU home broadband users providing additional telecom powerhouse added 498.1 million subscribers (+1.7% QoQ) with EBITDA margins surging to 51.8% (170bps QoQ), as consolidated revenue hit ₹410.5 billion (+18.8% YoY).RIL's ambitious new energy push is entering the critical execution phase, with management expecting "Giga factories/new energy projects (Polysilicon, wafer, cell, module, batteries) to be completed in the next four to six quarters."The scale is staggering: "Reliance gigacomplex will be the largest end-to-end renewable energy manufacturing 4x of Tesla giga factory," Bernstein notes. The company plans to commission solar/cell capacities by March next year, with the 7,000-acre Kutch site having "potential to produce 125GW of power."Nuvama's analysis reveals the hidden value bomb: "Drawing a solar module/cell capacity comparison with Waaree (13.3/5.4GW) and Premier (4/3.2GW), whose EVs are ~$10 bn and $6 bn, respectively, RIL's 20GW fully integrated solar equipment manufacturing facility could potentially translate to a much higher EV."The numbers are eye-popping: "Ascribing a 15x EV/EBITDA to RIL's modules business (20GW capacity) yields an EV of USD20bn, which could trigger a valuation re-rating for RIL's stock price—similar to the trend seen following RJIO's launch in 2017."This fundamental shift in RIL's business model is reshaping its investment appeal. "Prior to venturing into retail/telecom, RIL's earnings growth was determined by either: a) capex (new refining/chemical capacities), or b) margin cycles," JP Morgan notes. "Reliance Retail + Telecom now account for ~54% of total FY25 consolidated EBITDA."The new energy vertical adds another dimension: "RIL's New Energy rollout shall not only add 50%-plus to PAT, but also re-rate valuations, including the O2C business given its net zero-carbon target by 2035," according to much-anticipated Jio IPO, though "pushed beyond 2025," remains the ace up RIL's sleeve for unlocking massive shareholder value. JP Morgan values Reliance Retail at $121 billion, trading at ~32x FY27E EBITDA—significantly below DMART's 42x multiple."Any crystallization of this retail valuation upside – through an IPO process or through further stake sales – could lead to further upside in RIL's stock," JP Morgan analysts confidence is palpable: "We expect Reliance's consolidated Ebitda to improve significantly in the near future, led by increasing share of Jio and Retail." The brokerage sees RIL's "conservative valuation" as making it "an attractive bet for most large cap portfolios" in an "otherwise extended valuation of the Indian market."JP Morgan's investment thesis is equally compelling: "In a market where most stocks are trading well above historical valuations, Reliance's fair relative valuations are an attraction." The firm expects RIL to "deliver positive free cash flow" with an EBITDA run-rate of approximately $20 billion reinforces the bullish narrative: "The stock currently trades at 12.1x and 23.3x FY27F EV/EBITDA and P/E, respectively. We reiterate our Buy rating for RIL."Investors will now laser-focus on the upcoming AGM within two months, looking for "further announcements on growth plans in FMCG, the ramp-up of new energy facilities, the expansion of the media business, acceleration of growth in Retail, the ramp-up of subscriber additions and monetisation for Jio along and the IPO of Jio."With RIL targeting to "double the size of its Jio and Retail businesses" alongside the new energy ramp-up "to the size of its O2C business," the company's ambitious goal of "doubling Reliance's size by the end of FY30" suddenly appears within striking distance, according to RIL's 48 lakh shareholders weathering the current volatility, the message from Street's finest is clear: the best may be yet to come.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Time of India
20 hours ago
- Business
- Time of India
Will Reliance shares deliver bumper returns for 48 lakh shareholders? 3 game-changing triggers ahead
Despite recent investor disappointment with Q1 results, Reliance Industries (RIL) is poised for significant growth, according to major brokerages. Jio's rising ARPU through tariff hikes, the ambitious new energy business entering execution phase, and the potential Jio IPO are key catalysts. Analysts project substantial value creation, with targets indicating confidence in RIL's transformation. Tired of too many ads? Remove Ads Here are 3 growth triggers that can ignite a rally in RIL shares: 1) Jio's ARPU Explosion Through Strategic Tariff Hikes Tired of too many ads? Remove Ads 2) New Energy Business: The Next Opportunity Tired of too many ads? Remove Ads 3) Jio IPO: The Ultimate Value Crystallization Event While billionaire Mukesh Ambani-led Reliance Industries RIL ) disappointed investors with Q1 results that fell short of street expectations, leading to sharp selling pressure after a blistering 25% rally from March lows, major brokerages see a perfect storm of growth catalysts brewing that could trigger substantial value creation in the months mixed street reaction tells the tale of two stories: Kotak Equities downgraded the blue-chip Nifty heavyweight to 'Add' from 'Buy,' while global giants JP Morgan and Jefferies boldly upgraded their target prices by 8% and 5% respectively, signaling confidence in the oil-to-telecom giant's transformation delivered a "strong beat on higher margins" with ARPU climbing 1.3% quarter-on-quarter to ₹208.8 per month, according to Bernstein. But the real fireworks are yet to come."Over FY25-28, we expect Jio's ARPU to rise at 11% CAGR to Rs273, led by three tariff hikes of 10% each in end-2QFY26/27/28," Jefferies analysts project, with rising share of higher-ARPU home broadband users providing additional telecom powerhouse added 498.1 million subscribers (+1.7% QoQ) with EBITDA margins surging to 51.8% (170bps QoQ), as consolidated revenue hit ₹410.5 billion (+18.8% YoY).RIL's ambitious new energy push is entering the critical execution phase, with management expecting "Giga factories/new energy projects (Polysilicon, wafer, cell, module, batteries) to be completed in the next four to six quarters."The scale is staggering: "Reliance gigacomplex will be the largest end-to-end renewable energy manufacturing 4x of Tesla giga factory," Bernstein notes. The company plans to commission solar/cell capacities by March next year, with the 7,000-acre Kutch site having "potential to produce 125GW of power."Nuvama's analysis reveals the hidden value bomb: "Drawing a solar module/cell capacity comparison with Waaree (13.3/5.4GW) and Premier (4/3.2GW), whose EVs are ~$10 bn and $6 bn, respectively, RIL's 20GW fully integrated solar equipment manufacturing facility could potentially translate to a much higher EV."The numbers are eye-popping: "Ascribing a 15x EV/EBITDA to RIL's modules business (20GW capacity) yields an EV of USD20bn, which could trigger a valuation re-rating for RIL's stock price—similar to the trend seen following RJIO's launch in 2017."This fundamental shift in RIL's business model is reshaping its investment appeal. "Prior to venturing into retail/telecom, RIL's earnings growth was determined by either: a) capex (new refining/chemical capacities), or b) margin cycles," JP Morgan notes. "Reliance Retail + Telecom now account for ~54% of total FY25 consolidated EBITDA."The new energy vertical adds another dimension: "RIL's New Energy rollout shall not only add 50%-plus to PAT, but also re-rate valuations, including the O2C business given its net zero-carbon target by 2035," according to much-anticipated Jio IPO, though "pushed beyond 2025," remains the ace up RIL's sleeve for unlocking massive shareholder value. JP Morgan values Reliance Retail at $121 billion, trading at ~32x FY27E EBITDA—significantly below DMART's 42x multiple."Any crystallization of this retail valuation upside – through an IPO process or through further stake sales – could lead to further upside in RIL's stock," JP Morgan analysts confidence is palpable: "We expect Reliance's consolidated Ebitda to improve significantly in the near future, led by increasing share of Jio and Retail." The brokerage sees RIL's "conservative valuation" as making it "an attractive bet for most large cap portfolios" in an "otherwise extended valuation of the Indian market."JP Morgan's investment thesis is equally compelling: "In a market where most stocks are trading well above historical valuations, Reliance's fair relative valuations are an attraction." The firm expects RIL to "deliver positive free cash flow" with an EBITDA run-rate of approximately $20 billion reinforces the bullish narrative: "The stock currently trades at 12.1x and 23.3x FY27F EV/EBITDA and P/E, respectively. We reiterate our Buy rating for RIL."Investors will now laser-focus on the upcoming AGM within two months, looking for "further announcements on growth plans in FMCG, the ramp-up of new energy facilities, the expansion of the media business, acceleration of growth in Retail, the ramp-up of subscriber additions and monetisation for Jio along and the IPO of Jio."With RIL targeting to "double the size of its Jio and Retail businesses" alongside the new energy ramp-up "to the size of its O2C business," the company's ambitious goal of "doubling Reliance's size by the end of FY30" suddenly appears within striking distance, according to RIL's 48 lakh shareholders weathering the current volatility, the message from Street's finest is clear: the best may be yet to come.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Economic Times
a day ago
- Business
- Economic Times
Why did RIL's shares plummet despite analysts' positive projections?
Jani said Q1 results for O2C and retail businesses were below market expectations, while telecom unit results were in line with expectations. Synopsis Reliance Industries' shares experienced a decline of over 3% on Monday. This followed the release of Q1 earnings that were lower than anticipated. Investors reacted to the results and a deferred IPO plan. Despite the dip, brokerages maintain a positive outlook on the company. They foresee potential growth triggers in the near future. Mumbai: Shares of Reliance Industries dropped over 3% on Monday as investors weighed the conglomerate's lower-than-expected Q1 earnings against analysts' positive outlook on stock after results. Stock ended at ₹1,428.6 on Monday, down 3.2%, capping gains in Sensex and Nifty, which ended 0.5% higher. ADVERTISEMENT "Reliance shares had recently rallied on expectations of strong quarterly results and a potential IPO announcement for its telecom business," said Sumit Pokharna, VP, fundamental research, Kotak Securities. "But, the management's clarification the IPO is deferred to next year had earlier led to some correction, and combined with results below Street estimates, we saw some profit-booking." The stock has gone up about 17% so far this year, against Nifty's 5.7% gains. PAT in June quarter stood at ₹30,681 crore, up 36.8% from January-March. Its revenues from operations stood at ₹2,48,660 crore, down 6% from previous quarter. It had recorded a one-time gain from selling its stake in Asian Paints for nearly ₹8,900 crore. Brokerages remain positive on company, with most retaining 'buy' and 'add' ratings post results. Price targets imply an upside of 8-19% from current levels. "We see 3 growth triggers for RIL in near term: scale-up of new energy business; Jio tariff hikes; and potential IPO/listing for Jio which has now been pushed beyond 2025," said Nomura. The stock may underperform in near term. "In absence of clear catalysts, stock may remain a laggard," said Hemang Jani, director at Finazenn. Jani said Q1 results for O2C and retail businesses were below market expectations, while telecom unit results were in line with expectations. (You can now subscribe to our ETMarkets WhatsApp channel) Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Cyient shares fall over 9% after Q4 profit declines, core business underperforms Cyient shares fall over 9% after Q4 profit declines, core business underperforms L&T Technology Services shares slide 7% after Q4 profit dips L&T Technology Services shares slide 7% after Q4 profit dips Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? SEBI warns of securities market frauds via YouTube, Facebook, X and more SEBI warns of securities market frauds via YouTube, Facebook, X and more API Trading for All: Pi42 CTO Satish Mishra on How Pi42 is Empowering Retail Traders API Trading for All: Pi42 CTO Satish Mishra on How Pi42 is Empowering Retail Traders Security, transparency, and innovation: What sets Pi42 apart in crypto trading Security, transparency, and innovation: What sets Pi42 apart in crypto trading Bitcoin, Ethereum, or Altcoins? How investors are structuring their crypto portfolios, Avinash Shekhar explains Bitcoin, Ethereum, or Altcoins? How investors are structuring their crypto portfolios, Avinash Shekhar explains The rise of Crypto Futures in India: Leverage, tax efficiency, and market maturity, Avinash Shekhar of Pi42 explains NEXT STORY
Time of India
a day ago
- Business
- Time of India
Why did RIL's shares plummet despite analysts' positive projections?
Mumbai: Shares of Reliance Industries dropped over 3% on Monday as investors weighed the conglomerate's lower-than-expected Q1 earnings against analysts' positive outlook on stock after results. Stock ended at ₹1,428.6 on Monday, down 3.2%, capping gains in Sensex and Nifty, which ended 0.5% higher. "Reliance shares had recently rallied on expectations of strong quarterly results and a potential IPO announcement for its telecom business," said Sumit Pokharna, VP, fundamental research, Kotak Securities. "But, the management's clarification the IPO is deferred to next year had earlier led to some correction, and combined with results below Street estimates, we saw some profit-booking." The stock has gone up about 17% so far this year, against Nifty's 5.7% gains. PAT in June quarter stood at ₹30,681 crore, up 36.8% from January-March. Its revenues from operations stood at ₹2,48,660 crore, down 6% from previous quarter. It had recorded a one-time gain from selling its stake in Asian Paints for nearly ₹8,900 crore. Explore courses from Top Institutes in Select a Course Category Public Policy Design Thinking MBA Others Operations Management Technology Management Finance Data Science Leadership Healthcare Project Management Data Analytics Data Science Product Management Degree CXO others Cybersecurity MCA Digital Marketing healthcare Artificial Intelligence PGDM Skills you'll gain: Economics for Public Policy Making Quantitative Techniques Public & Project Finance Law, Health & Urban Development Policy Duration: 12 Months IIM Kozhikode Professional Certificate Programme in Public Policy Management Starts on Mar 3, 2024 Get Details Skills you'll gain: Duration: 12 Months IIM Calcutta Executive Programme in Public Policy and Management Starts on undefined Get Details Agencies Brokerages remain positive on company, with most retaining 'buy' and 'add' ratings post results. Price targets imply an upside of 8-19% from current levels. "We see 3 growth triggers for RIL in near term: scale-up of new energy business; Jio tariff hikes; and potential IPO/listing for Jio which has now been pushed beyond 2025," said Nomura. The stock may underperform in near term. "In absence of clear catalysts, stock may remain a laggard," said Hemang Jani, director at Finazenn. Jani said Q1 results for O2C and retail businesses were below market expectations, while telecom unit results were in line with expectations. ETMarkets WhatsApp channel )
Time of India
a day ago
- Business
- Time of India
Jio's self-built 5G stack draws global attention
A senior executive of Reliance Industries said the self-developed end-to-end 5G stack of Reliance Jio , the conglomerate's telecom arm, is gaining recognition globally and is a potential monetisable opportunity. 'It (Jio) is one of the leading deep tech companies in India with enormous amounts of innovation and technology development that we have done over the years,' Anshuman Thakur, senior vice president, Reliance Industries, said at the company's earnings call on Friday. Explore courses from Top Institutes in Select a Course Category Technology Cybersecurity others Finance Data Science Project Management Data Science Operations Management Product Management Artificial Intelligence MBA Public Policy Management Digital Marketing Others Data Analytics Healthcare Design Thinking healthcare PGDM CXO Leadership MCA Degree Skills you'll gain: Duration: 12 Weeks MIT xPRO CERT-MIT XPRO Building AI Prod India Starts on undefined Get Details Reliance Jio is an unlisted subsidiary of Jio Platforms, which holds Reliance Industries' telecom and digital businesses. 'Today this technology, this tech stack, the entire value chain, the whole software, hardware stack is only available with us and has been deployed at scale,' Thakur said. 'All the global operators are looking at us to see how we have done this so successfully. And then a whole bunch of initiatives on AI.' The latest addition to the telecom tech stack is the multi-point UBR technology for home connections, which global telcos have tried to replicate but failed, he said. UBR enables multiple home connections through a single 5G cell site targeting 50%-60% homes within a micro-cluster using a single transmission tower, bringing down deployment costs. 'We are the first to deploy UBR for UBR-based connectivity at scale. This is a technology that operators worldwide have tried to work on and have not had much success,' he said. UBR is the innovation child of Mimosa Networks , the US-based communications equipment maker which Jio Platforms acquired for $60 million through its wholly owned subsidiary Radisys Corporation in August 2023. Majority of Jio's UBR equipment are manufactured by US-based Sanmina Corporation, which has a joint venture with Reliance Industries in India. During the June quarter, Jio crossed the milestone of 20 million home connections, 7.4 million of which were AirFiber FWA (fixed wireless access) connections scaled with UBR tech. The telco now has 82% market share in 5G FWA connections in India. Analysts are bullish on Jio's strong customer additions and cost benefits from technology ownership after Q1 and have raised Jio's enterprise valuation. 'Jio's 5G tech stack, core, software, hardware and BSS/OSS are all in-house and proprietary,' brokerage firm IIFL Securities said in a report. 'This enables quicker revenue ramp-up due to lower dependence of vendors, lower costs due to licence fee savings, customisation/scale-up of configuration based on requirements, and potential monetisation by selling to global telcos.' IIFL has raised Jio's valuation to $134.2 billion (Rs11.2 lakh crore) from $133.9 billion it had said earlier. Equity research firm Jefferies also raised its revenue estimates by 1-4% to factor in the changes to subscriber assumptions and lower access/network costs. 'We believe RJio remains well-placed to deliver 18%/22% CAGR in revenues/EBITDA over FY25-28, given rising tariffs in mobile and scaleup of home broadband business . We raise our EV (enterprise valuation) for Jio to US $146 billion (Rs 12.19 lakh crore) on the EBITDA upgrade and roll-over to Jun-27,' Jefferies said in a report. Jio also holds the highest number of patents on 6G. Jio Cloud , launched last year, offering 100GB free cloud storage, now has 35 million consumers, Thakur said during the call. On Monday, rival telecom operator Bharti Airtel 's shares ended 0.4% higher on the BSE at Rs 1,908.75, giving it a market cap of more than Rs 10.88 lakh crore.
